Lenders
As the buyer, you may not care who issues the loan, as long as the money shows up. But how much you pay for that loan can be influenced by the company you choose to work with.
Shopping For A Loan:
There are five main categories of companies you may come across when shopping for a mortgage:
-
Portfolio Lenders
- Mortgage Bankers/Direct Lenders
- Mortgage Brokers
- Government Agencies
- Faith Financing
The Secondary Market:
Soon after your mortgage funds, you’ll receive a set of coupons for your monthly mortgage payments. Usually these are in the same name as the company you worked with to get the loan.
-
Your Loan was Sold: Often a few months later, you’ll receive a new set of coupons from a different company. Your loan has been purchased by this new company, and you will now send your monthly payments to them.
-
Mortgage Backed Securities: This is a very common occurrence: most lenders bundle a group of similar mortgages together and sell that bundle on the secondary market (these are called securities). This is how they get some profit on the mortgage without having to wait the 15 or 30 years for the loan to be paid off, and they generally take the money made in the sale and use it to make more loans. So more people can purchase homes.